Last Updated on October 24, 2023 by Neil Sharma
Thinking about investing in Canadian real estate? Thanks to new municipal legislation, property investors are setting their sights on the residential market in Kelowna, British Columbia.
A new piece of proposed legislation will permit the halving of existing duplex homes and allow Kelowna property owners to make properties as large as fourplexes.
But there’s a catch: “limited inventory,” says A.J Hazzi, founder and managing broker of Vantage West Realty Inc. Hazzi says that his savvy investor clients have already taken note, but there are still good properties available for the taking.
“There are 40 half-duplexes and 13 full duplexes on the Kelowna market right now,” Hazzi told CREW. “If you’re looking to get your foot on the local property ladder, you can find multi-family investment properties that pay all of your mortgage interest and then some.”
He added that even current renters who are frustrated by inflation – but have some money put away – can service their mortgage payments and still turn a monthly profit by investing in multi-family real estate.
“Over the last few years, prices have gone up significantly, and rents have as well, but not enough to keep step with interest rate increases and rising purchase prices. As a consequence, most properties aren’t cash flow positive right now.” Hazzi said.
“This happens to be one of the last property segments you can buy that – even with a property manager – still yields positive cash flows.”
Kelowna’s population is roughly over 150,000 but the cost of owning a home can be too high for many people here. As a result, rental demand in Kelowna is at an all-time high.
The second piece of legislation in Kelowna will prevent landlords from renting to students between September and June.
If those landlords decide to pivot and provide short-term rental accommodations to vacationers during the summer months instead, Hazzi anticipates that the student housing supply will plummet.
“They will do Airbnbs all year long to not surrender their summer revenue so that student housing stock will disappear and there will be a shortage of student housing. It just so happens that most of the aforementioned half- and full-duplex inventory is situated near Kelowna’s post-secondary institutions – namely around Hollywood, McCurdy, and Rutland Roads.”
“Any properties off of those roads are well positioned to accommodate students. That tends to be where a lot of the duplex inventory is, so it’s a natural fit,” he said.
But Hazzi has a happy medium up his sleeve.
In addition to owning his own brokerage, Hazzi is a 20-year investor with unparalleled knowledge of the Kelowna real estate market. For decades, Hazzi has meticulously studied local economic and demand fundamentals to building wealth in both his personal portfolio and his syndicated partnership, Cash Offer Canada.
According to his latest analysis of Kelowna’s residential real estate market, duplexes and student housing offer investors the best bang for their buck in 2023.
Hazzi has introduced his book of investor clients to what he calls house-hacking, which involves buying a property, creating additional rental units, then renting out those spaces to qualified tenants.
If you take advantage of hacking the right duplex or multi-family property, you can create four sources of rental income. In Kelowna, BC, a 3 bedroom upper floor unit can command up to $2,300 a month while a bottom floor suite commands around $1,700 a month.
“You can even house hack a residential unit into multiple rooms, which my clients have been happy to do.”
Renting out units by the bedroom can pull in $1,000 per room – especially if landlords are willing to provide certain enticements like bundled utilities, internet, and laundry.
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
